By: Jim Rounds December 1, 2009 City of Maricopa  Economic and Workforce Briefing
Synopsis: Yes, we are improving, but the recovery will not be all that impressive.  Continue to be cautious.
So finally going in the right direction, but…
<ul><li>3 rd  Quarter GDP UP </li></ul><ul><ul><ul><ul><ul><li>Clunkers, </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul...
Employment: We will be getting  bad employment news  for some time, even after the recession is technically over.
Primary Recession Indicators: <ul><li>Real GDP  </li></ul><ul><li>Real Income  </li></ul><ul><li>Employment </li></ul><ul>...
Real Gross Domestic Product Percent Change Quarter Ago, Annualized 1971 – 2009 *  Source: Bureau of Economic Analysis * Da...
Real Personal Income Net of Government Transfers Percent Change Quarter Ago, Annualized 1971 – 2009 *  Source: Bureau of E...
National Employment Percent Change Month Ago, Annualized (S/A) 1981 – 2009*  Source: U.S. Bureau of Labor Statistics *Data...
Industrial Production Percent Change Year Ago 1973 – 2009*  Source: The Conference Board *Data through September 2009 Rece...
Real Retail Sales U.S.  Percent Change Year Ago 1973 – 2009*  Source: Federal Reserve *Data through September 2009 **Three...
Recession Indicators Summary: <ul><li>Real GDP </li></ul><ul><li>Real Income </li></ul><ul><li>Employment </li></ul><ul><l...
The recession  MAY   TECHNICALLY  be over, but… … The recovery will be very weak and consumers will be a drag.
Financial Obligation Ratio** 1980 – 2009 *  Source: Federal Reserve *Data through second quarter 2009 **Ratio of mortgage ...
Mortgage Equity Withdrawal  as a share of Disposable Income  U.S.:  1971 – 2009*  Source: Bureau of Economic Analysis * Da...
Savings Rate 1973 – 2009*  Source: Federal Reserve *Data through September 2009 **Three-month moving average Recession Per...
State of Business? Still Ugly?
Corporate Profit  (Billions of Dollars, SA)  1975-2009* Source: Freelunch.com * Data through second quarter 2009 Recession...
Hours Worked Percent Change from Year Ago 1976 – 2009**  Source: Bureau of Labor Statistics **Data through third quarter 2...
Capacity Utilization Rate 1970 – 2009*  Source: The Conference Board *Data through September 2009 Recession Periods
Percentage of Large U.S. Banks Reporting  Easier  Standards  on  Business  Loans 1997 – 2009*  Source: Federal Reserve, Bo...
U.S. Summary: You are here (mixed news) Longer term?
Why No Strong Recovery? <ul><li>Some confidence will return but  consumers will still  feel poor  (i.e. wealth effect). </...
Why No Strong Recovery? <ul><li>Stock market will initially surge then  growth will be  slow. </li></ul><ul><li>Just getti...
State of Arizona
9 4 1 5 2 10 3 7 Job Growth 2006 11 15 6 22 8 Source: US BLS
3 YTD  September 09 v YTD September 08   50 13 26 39 2 30 8 16 47 Job Growth Update: Arizona Falls to 50 th 48 Hawaii 44 1...
= 300,000 lost AZ jobs during last two years. (>10% of jobs)
Employment Growth: Top 10 States <ul><li>North Dakota  </li></ul><ul><li>Louisiana </li></ul><ul><li>Nebraska </li></ul><u...
Arizona Employment Rank Among 50 States 1980 – 2009 Growth Over Previous Year  Source: Arizona State University 1980 2008 ...
How did AZ go from  2 nd  to 50 th ? <ul><li>Financial meltdown. </li></ul><ul><li>Credit crunch/freeze. </li></ul><ul><li...
Greater Phoenix Population  Annual Percent Change 1976–2010* Source: Arizona State University & Department of Commerce, Re...
Phoenix-Mesa MSA Employment*  Annual Percent Change 1975–2010**   Source: Department of Commerce, Research Administration ...
Phoenix-Mesa Employment  Source: Arizona Department of Commerce, Research Administration Sectors Increasing NONE!!! -1.0% ...
I don’t always buy houses, but when I do, I prefer  foreclosures. Stay thirsty my friends.
Investors: 1/3 to 1/2 of Market?
<ul><li>How Investors Impact the Market: </li></ul><ul><ul><li>Temporarily  inflate housing  prices; </li></ul></ul><ul><u...
Home Prices Indices   2000 – 2009  Source: Macro Markets, LLC; AMLS ? Recession Periods
Single-Family Permits Greater Phoenix 1975–2008 Source: PMHS / RL Brown   # Permits Recession Periods
Excess SF supply is likely greater than 50,000 75,000 units right now. Not much better in 2010.
Balance between supply and demand will not be fully achieved until about 2014.  But building will still occur between now ...
Commercial Real Estate?
Back to normal vacancy rates (full recovery)? <ul><li>Office = 2017  ish </li></ul><ul><li>Industrial = 2016  ish </li></u...
How does AZ go from  49 th  to 2 nd ? <ul><li>Wait.  Slow recovery. </li></ul><ul><li>Credit frees up. </li></ul><ul><li>C...
<ul><li>When confused about the strength of our recovery, simply ask: </li></ul><ul><ul><li>Are population flows improving...
<ul><li>We will benefit from the U.S. recovery; </li></ul><ul><li>The Dow shock appears to be over. </li></ul><ul><li>Hous...
How is Maricopa Doing?
New Home Sales Fairly Level Over Last 12 Months –  Consistent Pattern with G.P.
Foreclosure Activity City of Maricopa
History of Active Listings City of Maricopa
May 2009 ARMLS Listings City of Maricopa October 2009
May 2009 Revised Permit Projections City of Maricopa YTD through September 2009 there have been 272 SFR permits issued. Oc...
SURVEY HIGHLIGHTS
SURVEY RESULTS Statistics From 3 Different Survey Sources: <ul><li>Mail Based Survey (445 Responses –  COMPLETE ) </li></u...
Employment
Employment
Labor Force – Diversified Skills
Employment – Travel Still an Issue
Employment – Travel Still an Issue
Employment – Travel Still an Issue
Employment – Travel Still an Issue
Employment – Travel Still an Issue
Education <ul><li>Mail and Online respondents reported slightly higher educational attainment overall compared to last yea...
Education
 
Household Income – Comparable to Maricopa County
Residency
Where They Came From – Comparable to Last Year’s Survey
High Percentage of Homeowners.
Household Size
FINAL QUESTION
FINAL QUESTION
 
<ul><li>Summary: </li></ul><ul><li>The City has a significant number of  skilled workers that want to work  locally; </li>...
ELLIOTT D. POLLACK   & Company 7505 East Sixth Avenue,  Suite 100  Scottsdale, Arizona  85251 480-423-9200 P    480-423-59...
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Maricopa Economic Outlook and Labor Study Preview

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Maricopa Economic Outlook and Labor Study Preview

  1. 1. By: Jim Rounds December 1, 2009 City of Maricopa Economic and Workforce Briefing
  2. 2. Synopsis: Yes, we are improving, but the recovery will not be all that impressive. Continue to be cautious.
  3. 3. So finally going in the right direction, but…
  4. 4. <ul><li>3 rd Quarter GDP UP </li></ul><ul><ul><ul><ul><ul><li>Clunkers, </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Inventories, </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Little else. </li></ul></ul></ul></ul></ul>
  5. 5. Employment: We will be getting bad employment news for some time, even after the recession is technically over.
  6. 6. Primary Recession Indicators: <ul><li>Real GDP </li></ul><ul><li>Real Income </li></ul><ul><li>Employment </li></ul><ul><li>Industrial Production </li></ul><ul><li>Wholesale – Retail Sales </li></ul>
  7. 7. Real Gross Domestic Product Percent Change Quarter Ago, Annualized 1971 – 2009 * Source: Bureau of Economic Analysis * Data through 3rd quarter 2009 Recession Periods
  8. 8. Real Personal Income Net of Government Transfers Percent Change Quarter Ago, Annualized 1971 – 2009 * Source: Bureau of Economic Analysis * Data through third quarter 2009 Recession Periods
  9. 9. National Employment Percent Change Month Ago, Annualized (S/A) 1981 – 2009* Source: U.S. Bureau of Labor Statistics *Data through October 2009 Recession Periods
  10. 10. Industrial Production Percent Change Year Ago 1973 – 2009* Source: The Conference Board *Data through September 2009 Recession Periods
  11. 11. Real Retail Sales U.S. Percent Change Year Ago 1973 – 2009* Source: Federal Reserve *Data through September 2009 **Three-month moving average Recession Periods
  12. 12. Recession Indicators Summary: <ul><li>Real GDP </li></ul><ul><li>Real Income </li></ul><ul><li>Employment </li></ul><ul><li>Industrial Production </li></ul><ul><li>Wholesale – Retail Sales </li></ul>
  13. 13. The recession MAY TECHNICALLY be over, but… … The recovery will be very weak and consumers will be a drag.
  14. 14. Financial Obligation Ratio** 1980 – 2009 * Source: Federal Reserve *Data through second quarter 2009 **Ratio of mortgage and consumer debt (including auto, rent and tax payments) to disposable income. Recession Periods
  15. 15. Mortgage Equity Withdrawal as a share of Disposable Income U.S.: 1971 – 2009* Source: Bureau of Economic Analysis * Data through second quarter 2009 Recession Periods
  16. 16. Savings Rate 1973 – 2009* Source: Federal Reserve *Data through September 2009 **Three-month moving average Recession Periods
  17. 17. State of Business? Still Ugly?
  18. 18. Corporate Profit (Billions of Dollars, SA) 1975-2009* Source: Freelunch.com * Data through second quarter 2009 Recession Periods
  19. 19. Hours Worked Percent Change from Year Ago 1976 – 2009** Source: Bureau of Labor Statistics **Data through third quarter 2009 Recession Periods
  20. 20. Capacity Utilization Rate 1970 – 2009* Source: The Conference Board *Data through September 2009 Recession Periods
  21. 21. Percentage of Large U.S. Banks Reporting Easier Standards on Business Loans 1997 – 2009* Source: Federal Reserve, Board of Governors * Data as of October 2009 survey. Recession Periods
  22. 22. U.S. Summary: You are here (mixed news) Longer term?
  23. 23. Why No Strong Recovery? <ul><li>Some confidence will return but consumers will still feel poor (i.e. wealth effect). </li></ul><ul><li>Home sales will eventually increase but housing supply will still exceed demand. </li></ul><ul><li>Job losses will continue past the recession ending date/gains will be slow to materialize. </li></ul>
  24. 24. Why No Strong Recovery? <ul><li>Stock market will initially surge then growth will be slow. </li></ul><ul><li>Just getting started with problems in commercial real estate. </li></ul><ul><li>Excess production capacity will limit investment. </li></ul><ul><li>Less pent up consumer demand created during downturn than normal. </li></ul>
  25. 25. State of Arizona
  26. 26. 9 4 1 5 2 10 3 7 Job Growth 2006 11 15 6 22 8 Source: US BLS
  27. 27. 3 YTD September 09 v YTD September 08 50 13 26 39 2 30 8 16 47 Job Growth Update: Arizona Falls to 50 th 48 Hawaii 44 1 7 5 Alaska 4 18 6 27
  28. 28. = 300,000 lost AZ jobs during last two years. (>10% of jobs)
  29. 29. Employment Growth: Top 10 States <ul><li>North Dakota </li></ul><ul><li>Louisiana </li></ul><ul><li>Nebraska </li></ul><ul><li>Alaska </li></ul><ul><li>South Dakota </li></ul><ul><li>Montana </li></ul><ul><li>Oklahoma </li></ul><ul><li>Texas </li></ul><ul><li>New York </li></ul><ul><li>New Hampshire </li></ul>
  30. 30. Arizona Employment Rank Among 50 States 1980 – 2009 Growth Over Previous Year Source: Arizona State University 1980 2008 1994 1982 1984 1986 1988 1990 1992 1996 1998 2000 2002 2004 2006 = YTD September = 50 Recession Periods
  31. 31. How did AZ go from 2 nd to 50 th ? <ul><li>Financial meltdown. </li></ul><ul><li>Credit crunch/freeze. </li></ul><ul><li>Overextended consumer. </li></ul><ul><li>Loss of wealth incl. home equity. </li></ul><ul><li>Can’t sell homes or retire. </li></ul><ul><li>Population inflows weaken. </li></ul><ul><li>Excess SF construction. </li></ul><ul><li>Homebuilding crash. </li></ul><ul><li>Excess commercial construction </li></ul><ul><li>Construction job losses. </li></ul><ul><li>All sector job loses. </li></ul><ul><li>Government crisis. </li></ul>
  32. 32. Greater Phoenix Population Annual Percent Change 1976–2010* Source: Arizona State University & Department of Commerce, Research Administration 2007 and 2008 are estimates put out by ADES and may be subject to substantial revision. * 2009 & 2010 forecast is from Elliott D. Pollack & Co. 2008 = 1%? 2009 = 0%? Recession Periods
  33. 33. Phoenix-Mesa MSA Employment* Annual Percent Change 1975–2010** Source: Department of Commerce, Research Administration *Non-agricultural wage & salary employment. Changed from SIC to NAICS reporting in 1990. ** 2008, 2009, & 2010 forecast is from Elliott D. Pollack & Co. Recession Periods
  34. 34. Phoenix-Mesa Employment Source: Arizona Department of Commerce, Research Administration Sectors Increasing NONE!!! -1.0% Health Services -1.2% Educational Services -6.6% Other Services -9.9% Transp. & Utilities -8.0% Manufacturing -2.8% Leisure & hosp svcs -5.0% Government -11.7% Prof. & Bus. Services -25.5% Construction -7.7% Trade -6.5% -5.3% -20.5% Financial Activities Information Mining Sectors in Decline
  35. 35. I don’t always buy houses, but when I do, I prefer foreclosures. Stay thirsty my friends.
  36. 36. Investors: 1/3 to 1/2 of Market?
  37. 37. <ul><li>How Investors Impact the Market: </li></ul><ul><ul><li>Temporarily inflate housing prices; </li></ul></ul><ul><ul><li>2) Temporarily deflate housing “supply.” </li></ul></ul>
  38. 38. Home Prices Indices 2000 – 2009 Source: Macro Markets, LLC; AMLS ? Recession Periods
  39. 39. Single-Family Permits Greater Phoenix 1975–2008 Source: PMHS / RL Brown # Permits Recession Periods
  40. 40. Excess SF supply is likely greater than 50,000 75,000 units right now. Not much better in 2010.
  41. 41. Balance between supply and demand will not be fully achieved until about 2014. But building will still occur between now and then. Distinguish between % growth and level !!!
  42. 42. Commercial Real Estate?
  43. 43. Back to normal vacancy rates (full recovery)? <ul><li>Office = 2017 ish </li></ul><ul><li>Industrial = 2016 ish </li></ul><ul><li>Retail = 2015 ish </li></ul>
  44. 44. How does AZ go from 49 th to 2 nd ? <ul><li>Wait. Slow recovery. </li></ul><ul><li>Credit frees up. </li></ul><ul><li>Consumers more confident. </li></ul><ul><li>Overall US economy improves. </li></ul><ul><li>Stock market improves. </li></ul><ul><li>Housing prices rise. </li></ul><ul><li>People move to AZ. </li></ul><ul><li>Excess housing absorbed. </li></ul><ul><li>Construction job gains. </li></ul><ul><li>All sector job gains. </li></ul><ul><li>Improved government revenue. </li></ul><ul><li>Grow our base industries!!! </li></ul>
  45. 45. <ul><li>When confused about the strength of our recovery, simply ask: </li></ul><ul><ul><li>Are population flows improving? </li></ul></ul><ul><ul><li>2) Are we creating jobs? </li></ul></ul>
  46. 46. <ul><li>We will benefit from the U.S. recovery; </li></ul><ul><li>The Dow shock appears to be over. </li></ul><ul><li>Housing is very affordable again and prices are no longer falling; </li></ul><ul><li>Single family permitting has already bottomed; </li></ul><ul><li>The underlying fundamentals haven’t changed; </li></ul><ul><li>California is still a complete disaster; </li></ul><ul><li>Positive steps being taken at State Capitol; </li></ul><ul><li>Strong long-term outlook. </li></ul>Positives? Be Patient!
  47. 47. How is Maricopa Doing?
  48. 48. New Home Sales Fairly Level Over Last 12 Months – Consistent Pattern with G.P.
  49. 49. Foreclosure Activity City of Maricopa
  50. 50. History of Active Listings City of Maricopa
  51. 51. May 2009 ARMLS Listings City of Maricopa October 2009
  52. 52. May 2009 Revised Permit Projections City of Maricopa YTD through September 2009 there have been 272 SFR permits issued. October 2009
  53. 53. SURVEY HIGHLIGHTS
  54. 54. SURVEY RESULTS Statistics From 3 Different Survey Sources: <ul><li>Mail Based Survey (445 Responses – COMPLETE ) </li></ul><ul><li>On-Line Survey (200 Responses – COMPLETE ) </li></ul><ul><li>Phone Intercept Survey (233 Responses – Preliminary ) </li></ul>
  55. 55. Employment
  56. 56. Employment
  57. 57. Labor Force – Diversified Skills
  58. 58. Employment – Travel Still an Issue
  59. 59. Employment – Travel Still an Issue
  60. 60. Employment – Travel Still an Issue
  61. 61. Employment – Travel Still an Issue
  62. 62. Employment – Travel Still an Issue
  63. 63. Education <ul><li>Mail and Online respondents reported slightly higher educational attainment overall compared to last year. </li></ul><ul><li>HIGHLIGHTS </li></ul><ul><li>Higher percentage with Bachelor’s Degrees </li></ul><ul><ul><li>(32.8% v. 29%) </li></ul></ul><ul><li>Comparable percentage with Graduate Degrees </li></ul>
  64. 64. Education
  65. 66. Household Income – Comparable to Maricopa County
  66. 67. Residency
  67. 68. Where They Came From – Comparable to Last Year’s Survey
  68. 69. High Percentage of Homeowners.
  69. 70. Household Size
  70. 71. FINAL QUESTION
  71. 72. FINAL QUESTION
  72. 74. <ul><li>Summary: </li></ul><ul><li>The City has a significant number of skilled workers that want to work locally; </li></ul><ul><li>This will be an economic development advantage; </li></ul><ul><li>Other items still need to be addresses though. </li></ul>
  73. 75. ELLIOTT D. POLLACK & Company 7505 East Sixth Avenue, Suite 100 Scottsdale, Arizona 85251 480-423-9200 P 480-423-5942 F www.arizonaeconomy.com Economic and Real Estate Consulting WWW.ARIZONAECONOMY.COM INFO @ EDPCO.COM

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